Risk management & financials

Managing risk, funding the future

Risks are carefully tracked by ACL’s internal risk management processes, reviewed monthly by management and at every Board meeting.

Risk management

How we track risk

Akatika’anga I te au mea te ka riro I te Tamanamanata I te Akatere’anga o te Tu’anga Angaanga

There are risks to achieving ACL’s strategies. Risks are carefully tracked by ACL’s internal risk management processes.

Maintaining a risk register

ACL maintains a risk register that records:

  • The proximity and rating of the likelihood and impact of that risk
  • Details of the potential impact on ACL
  • The mitigation strategies that have been identified and the status of these
  • What success looks like
  • The risk weighted possible financial impact, after mitigation, on ACL
  • The owner of the risk

Risk review

ACL management reviews and updates the risk register monthly, while the ACL Board reviews the risk register at each Board meeting. A quarterly report is provided to our shareholder, CIIC, covering the key risks, the details of each risk and key mitigation strategies, as required by the Cook Islands Investment Corporation Act.

Tania Apera, ACL Systems Engineer, completing a maintenance inspection
Tania Apera, ACL Systems Engineer, completing a maintenance inspection.

The largest risk areas

Competition and new technologies

Advancements in satellite technologies and declining satellite pricing may reduce demand for traditional submarine cable services and place pressure on ACL’s pricing and revenues.

Cable break

While the system has been engineered for resilience, extreme events may still result in outages requiring repair and recovery. ACL maintains contingency arrangements to support timely response and restoration of services.

Financial risks

ACL’s establishment was partially funded by a US$15M loan from the Asian Development Bank. As the company has a cost base in both USD and NZD, it is exposed to interest rate and foreign exchange rate risk when there are rate movements. Interest payments are a major cost and ACL has no control over the fluctuations of interest or foreign exchange rates. ACL closely monitors market conditions and seeks advice from a qualified NZ-based treasury advisor on such matters.

Consortium cohesion

ACL is dependent on its consortium partners to help fund, operate and maintain the Manatua Cable to high standards. Varied partner priorities can result in the risk that maintenance and operations will be carried out differently to ACL expectations. This requires close monitoring.

Onward connectivity

Securing and operating affordable and high-quality onward connectivity for ACL is critical to the quality of the service ACL can offer, and this will need to be carefully managed.

Operational performance

ACL has a small team, which can create issues with succession planning, talent management, and staff scheduling. Skills and experience are challenging to source and nurture, therefore this is a risk and a focus for ACL.

New market entrants

ACL’s purpose of realising the benefits of the Manatua Cable investment for the Cook Islands will be limited if credible new entrants in the telecommunications market fail to materialise.

ACL will be exploring opportunities to monetise the Manatua cable system and thus be able to reduce the pricing plans offered to the local service providers.

Financials · Akapapa’anga Turanga Moni

Funding, costs and dividend policy

ACL operates in a highly competitive market, therefore financial information is not included on the website due to its commercial sensitivity. Financial information is provided to our shareholder, CIIC.

ACL’s establishment was funded with NZ$15m of grant funding from the New Zealand Aid Programme, a US$15m low-cost development loan from the Asian Development Bank secured by the Government of the Cook Islands, and a further direct Government appropriation.

Operational costs primarily comprise

  • Company operations
  • Contributions to the running costs of the Manatua Cable as defined in the Manatua Consortium Construction and Maintenance Agreement
  • Costs for running the cable landing stations in Rarotonga and Aitutaki
  • Costs of onward connectivity from the Manatua cable to the wider world
  • Debt repayment to ADB

Onward connectivity from the Manatua Cable system is based on multi-year IRU purchases with other cable systems. Traditional cost modelling indicates that as cable bandwidth utilisation increases, the price per megabit offered can decrease.

Demand for future bandwidth growth depends on

  • The incumbent service provider developing new products to mitigate the impact of OTT providers
  • New entrants establishing themselves in the local market
  • ACL exploring new opportunities to monetise the Manatua Cable system

ACL will maintain its commercial viability through the partnership with the incumbent service provider, enabling new entrants to establish themselves in the Cook Islands as well as seeking new business opportunities within the Manatua cable consortium.

ACL aims to maintain competitive wholesale pricing for service providers, supporting a competitive retail market, while ensuring long-term commercial sustainability.

Dividend policy

ACL’s core strategy prioritises affordability, network resilience, and long-term asset sustainability over profit distribution. Accordingly, dividend payments are not expected in the near to medium term, with all available earnings retained to support:

  1. Debt repayment requirements
  2. A contingency fund for cable repairs
  3. Long-term asset replacement fund — end of life in 2045
ACL Systems Engineer Tania Apera conducting checks in the cable landing station in Rarotonga
ACL Systems Engineer Tania Apera conducting checks in the cable landing station in Rarotonga.